[DISCUSSION DRAFT] H. R. ll

Transcription

1 1TH CONGRESS 2D SESSION [DISCUSSION DRAFT] H. R. ll To protect American taxpayers and homeowners by creating a sustainable housing finance system for the st century, and for other purposes. IN THE HOUSE OF REPRESENTATIVES Ml. llllll introduced the following bill; which was referred to the Committee on lllllllllllllll A BILL To protect American taxpayers and homeowners by creating a sustainable housing finance system for the st century, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE; TABLE OF CONTENTS. (a) SHORT TITLE. This Act may be cited as the Bipartisan Housing Finance Reform Act of. (b) TABLE OF CONTENTS. The table of contents for this Act is as follows: Sec. 1. Short title; table of contents. VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

2 Sec. 2. Purposes. 2 TITLE I STRENGTHENING THE SECONDARY MORTGAGE MARKET AND IMPROVING BORROWER ACCESS TO CONVENTIONAL HOME LOANS Sec. 1. Establishment of Ginnie Mae Plus. Sec. 2. Authority to guarantee MBS protected with private capital. Sec. 3. Ginnie Mae standards for issuers. Sec. 4. Approved private credit enhancement. Sec. 5. Standards for private credit enhancers. Sec. 6. Ownership and management of private credit enhancers. Sec.. Bright-line distinction. Sec.. FHFA oversight and duties. Sec.. Prudential management. Sec. 0. Capital requirements. Sec. 1. Private Capital Reserves. Sec. 1. Portfolios. Sec. 1. Conflicts of interest. Sec. 1. FHFA coordination with GNMA. Sec. 1. Resolution. Sec. 1. Small lender access program. Sec. 1. Lender access to cash window through Federal Home Loan Banks. Sec. 1. Regulatory implementation of credit risk-sharing market. Sec. 1. Definitions. TITLE II DEVELOPMENT AND DEPLOYMENT OF A MORTGAGE SECURITY MARKET EXCHANGE AND DATA REPOSITORY Sec. 1. Purposes. Sec. 2. Definitions. Subtitle A Establishment and Authority of the Exchange Sec. 1. Establishment. Sec. 2. General powers; authorized and prohibited activities. Sec. 3. Mission and structure of Common Securitization Solutions. Sec. 4. Transition period. Sec. 5. Transfer date. Sec. 2. Repayment of cost. Sec. 2. Regulation, supervision, and enforcement. Subtitle B Standards for Qualified Securities Sec. 1. Qualified securities. Sec. 2. Standards for qualified securities. Subtitle C National Mortgage Data Repository Sec. 1. Organization and operation. Sec. 2. Legal effect of registration with Repository. Sec. 3. Grants to States; repayment. Sec. 4. Judicial review. Sec. 5. Transition provisions. TITLE III. AFFORDABLE ACCESS AND MARKET MODERNIZATION REFORMS VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

3 Sec Affordability principles. Sec Multifamily principles. Sec Modernization principles. Sec Definitions. 3 TITLE IV ENTERPRISE TRANSITION Subtitle A Transition and Conversion Sec. 4. Repeal of charters. Sec. 4. Termination of current conservatorships; mandatory receiverships. Sec. 4. Receiver s discretionary authority to create receivership entity. Sec. 4. Effect of repeal of enterprise charter. Sec. 4. Wind-down and transition. Subtitle B Limitations on Authority During Conservatorships Sec. 4. Limitations on enterprise authority. Sec. 4. Mandatory risk-sharing. TITLE V REGULATORY STRUCTURE Subtitle A FHFA Sec Board of Directors of Federal Housing Finance Agency. Subtitle B Ginnie Mae Sec. 5. Removal from HUD; establishment as independent entity. Sec. 5. Optional use of securitization Platform. Subtitle C Housing Market Reforms Sec. 5. Basel III Liquidity Coverage Ratio amendments. Sec. 5. Notice of junior mortgage or lien. Sec. 5. Limitation on mortgages held by loan servicers. Sec. 5. GNMA prohibition relating to use of power of eminent domain. TITLE VI MISCELLANEOUS AND CONFORMING AMENDMENTS Sec Conforming amendment to limitation on Ginnie Mae commitment authority for Government-insured mortgage securities. Sec Conforming amendments to Securities Act of 33. Sec Conforming amendments to title, United States Code. Sec Conforming amendment to the Investment Company Act of 40. Sec Fair lending laws SEC. 2. PURPOSES. The purposes of this Act are (1) to preserve the liquidity of long-term traditional mortgage products, such as the 30-year fixed VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

4 4 1 rate loan, and improve borrower access to conven- 2 tional home loans; 3 (2) to create more opportunities for smaller 4 lenders to serve the housing needs of their commu- 5 nities; 6 (3) to provide lenders and investors for the first time a mortgage security market exchange and data repository to foster liquidity in the private-label se- curities market; (4) to place the successor entities of Fannie Mae and Freddie Mac on a sustainable path going forward while ensuring no future market participant needs taxpayer support; (5) to create more choices for consumers and foster a competitive secondary mortgage market; (6) to promote access to affordable mortgage credit and affordable housing across the United States, including to underserved borrowers; () to ensure that mortgage lenders of all sizes, charter types, and locations have equitable access to the secondary mortgage market; and () to provide for a gradual and smooth transi- tion to the housing finance system contemplated by this Act. VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

5 TITLE I STRENGTHENING THE SECONDARY MORTGAGE MAR- KET AND IMPROVING BOR- ROWER ACCESS TO CONVEN- TIONAL HOME LOANS SEC. 1. ESTABLISHMENT OF GINNIE MAE PLUS. (a) ESTABLISHMENT. The Government National Mortgage Association (Ginnie Mae) shall establish a program under this title to be known as Ginnie Mae Plus that shall preserve the liquidity of long-term traditional mortgage products, such as the 30-year fixed rate loan, and improve borrower access to conventional home loans. (b) REQUIREMENTS. Under Ginnie Mae Plus (1) Ginnie Mae shall guarantee payment of securities that are backed by eligible conventional mortgages and protected with private capital; and (2) the issuers of such securities shall be responsible for securing private loan-level credit insurance from approved private credit enhancers. SEC. 2. AUTHORITY TO GUARANTEE MBS PROTECTED WITH PRIVATE CAPITAL. (a) AUTHORITY. Subsection (g) of section 306 of the National Housing Act ( U.S.C. (g)) is amended VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

6 6 1 (1) by inserting (A) AUTHORITY TO GUAR- 2 ANTEE SECURITIES. after (g)(1) ; and 3 (2) in the first sentence of paragraph (1) 4 (A) by inserting (I) before insured 5 under the National Housing Act ; 6 (B) by inserting before the period at the end the following:, or (II) eligible conventional mortgages as such term is defined in paragraph (4). (b) DEFINITIONS. Subsection (g) of section 306 of the National Housing Act ( U.S.C. (g)), is amend- ed by adding at the end the following new paragraph: (4) DEFINITIONS. For purposes of this section, the following definitions shall apply: (A) CONVENTIONAL MORTGAGE. (i) IN GENERAL. The term conventional mortgage means a mortgage that (I) is a qualified mortgage, as such term is defined under section C(b)(2) of the Truth in Lending Act ( U.S.C. 3c(b)(2)); (II) has a term to maturity of not more than 30 years; (III) fully amortizes over such term to maturity; VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

7 1 (IV) has an original principal obliga- 2 tion that does not exceed 3 (aa) 5 percent of the appraised 4 value of the property that is subject to 5 the mortgage; and 6 (bb) the applicable dollar amount limitation determined under the 6th sentence of paragraph (2) of section 302(b) of the National Hous- ing Act ( U.S.C. (b)(2)) or under the last 2 sentences of such paragraph; (V) in the case of mortgage having a principal obligation in an amount equal to or exceeding 5 percent of such appraised value, is covered by private mortgage in- surance or another credit risk transfer mechanism (as such term as defined in section 1 of the Bipartisan Housing Fi- nance Reform Act of ) in the amount required by the Director of the Federal Housing Finance Agency; (VI) is made for VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 0000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

8 1 (aa) the purchase of a property 2 that is the principal residence of the 3 mortgagor; or 4 (bb) prepaying or paying off an 5 existing loan secured by the principal 6 residence of the mortgagor; and (VII) has an outstanding principal balance, at the time of the guarantee of the eligible conventional mortgage security, that is not more than 5 percent of the value of the property securing the loan. (ii) EXCLUSIONS. Such term does not include (I) a mortgage that is a Govern- ment-insured mortgage; (II) a mortgage described in clause (i)(v)(bb) (aa) under which a portion of the proceeds of the mortgage are used to prepay or pay off the outstanding principal and interest owed on an ex- isting mortgage and a portion of such proceeds are made available to or on behalf of the borrower; and VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 0000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

9 1 (bb) that has an original prin- 2 cipal obligation that exceeds 0 per- 3 cent of the appraised value of the 4 property that is subject to the mort- 5 gage; or 6 (III) a mortgage under which the mortgagor, or the spouse of the mortgagor, is the mortgagor under 3 or more other outstanding mortgages that are govern- ment-insured mortgages or eligible conven- tional mortgages. (B) ELIGIBLE CONVENTIONAL MORTGAGE. The term eligible conventional mortgage means a conventional mortgage for which approved private credit enhancement, as such term is defined in section 1 of the Bipartisan Housing Finance Reform Act of, is provided. (C) ELIGIBLE CONVENTIONAL MORTGAGE SE- CURITY. The term eligible conventional mortgage security means a security that is based on or backed by a trust or pool of eligible conventional mortgages. (D) GOVERNMENT-INSURED MORTGAGE. The term Government-insured mortgage means a mortgage described in clause (ii)(i) of the first sentence of paragraph (1) of this subsection.. VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 0000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

10 SEC. 3. GINNIE MAE STANDARDS FOR ISSUERS. (a) ISSUANCE. Not later than the expiration of the -month period beginning on the date of the enactment of this Act, the Government National Mortgage Association shall issue such regulations, standards, and guidelines as may be necessary to provide for (1) standards and procedures for approval under section 306(g)(1) of the National Housing Act ( U.S.C. (g)(1)) of issuers of eligible conventional mortgage securities (as such term is defined in such section 306(g)(4) of such Act, as added by the amendment made by section 2(b) of this Act) for purposes of eligibility for guaranty under such section 306(g) of the payment of principal of and interest on such securities; and (2) fees to be charged to issuers of such securities for guaranties of such securities made under such section 306(g). (b) PROHIBITION ON PRICE DISCRIMINATION. The Government National Mortgage Association may not discriminate on the amount of fees charged to issuers of securities based on the size or mortgage production volume of an issuer. SEC. 4. APPROVED PRIVATE CREDIT ENHANCEMENT. The Director of the Federal Housing Finance Agency shall develop, adopt, and publish standards and proce- VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

11 1 dures under this title for the approval of private credit 2 enhancement with respect to conventional mortgages that 3 may be provided in connection with the guarantee by the 4 Government National Mortgage Association under section 5 306(g) of the National Housing Act ( U.S.C. (g)) 6 of securities based on or backed by such mortgages. SEC. 5. STANDARDS FOR PRIVATE CREDIT ENHANCERS. (a) IN GENERAL. The Director of the Federal Housing Finance Agency shall develop, adopt, and publish standards under this title for the approval of private credit enhancers to provide approved private credit enhancement for conventional mortgages in connection with the guarantee by the Government National Mortgage Association under section 306(g) of the National Housing Act ( U.S.C. (g)) of securities based on or backed by such mortgages, and procedures for obtaining such approval. (b) PROHIBITION ON PRICE DISCRIMINATION. The standards adopted under this title shall ensure that private credit enhancers do not discriminate on the price paid for the credit enhancement for an eligible conventional mortgage based on the size or loan production volume of the lender or issuer purchasing the credit enhancement. (c) APPLICATION; SUSPENSION; REVOCATION; AP- PEAL; REAPPROVAL. The standards and procedures established under this title with respect to approved private VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

12 1 credit enhancers, approved private credit enhancement, 2 and approved credit risk transfer mechanisms shall in- 3 clude standards and procedures for 4 (1) application for such approval; 5 (2) suspension of such approval; 6 (3) revocation of such approval; (4) appeal of suspension or revocation of such approval; and (5) re-approval. SEC. 6. OWNERSHIP AND MANAGEMENT OF PRIVATE CREDIT ENHANCERS. (a) STRUCTURE AND OWNERSHIP. The standards required under section 5 shall include standards under this section regarding the establishment, structure, and ownership of an approved private credit enhancer. An approved private credit enhancer shall have such ownership structure as the Director may, by regulation, provide, which may include a corporation, mutual association, partnership, limited liability corporation, cooperative, mutual company, or any other organizational form that the Director considers appropriate. (b) MANAGEMENT EXPERIENCE AND FITNESS. The members of the management of an approved private credit enhancer shall meet such standards for experience and for VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

13 1 general character and fitness, including compliance with 2 Federal and State laws, as the Director shall require SEC.. BRIGHT-LINE DISTINCTION. Except as provided under sections 1(a), an approved private credit enhancer or any affiliate of any approved private credit enhancer may not (1) be approved by the Government National Mortgage Association as an issuer of any securities based on or backed by residential mortgages, including eligible conventional mortgages; or (2) issue any such securities. SEC.. FHFA OVERSIGHT AND DUTIES. (a) IN GENERAL. All approved private credit enhancers shall, to the extent provided in this title, be subject to the supervision and regulation of the Director of the Federal Housing Finance Agency. (b) AUTHORITY OVER APPROVED PRIVATE CREDIT ENHANCERS. The Director shall have general regulatory authority over each approved private credit enhancer and shall exercise such general regulatory authority to ensure that the purposes of this title and any other applicable laws are carried out. (c) PRINCIPAL DUTIES. Among the principal duties of the Director pursuant to this section shall be VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

14 1 (1) to oversee the prudential operations of each 2 approved private credit enhancer; and 3 (2) to ensure that 4 (A) each approved private credit enhancer 5 operates in a safe and sound manner, including 6 maintenance of adequate capital and internal controls; and (B) each approved private credit enhancer complies with this title and the rules, regula- tions, guidelines, and orders issued under this title. SEC.. PRUDENTIAL MANAGEMENT. The Director shall establish prudential standards, by regulation or guideline, for approved private credit enhancers to (1) ensure (A) the safety and soundness of such entities; and (B) the maintenance of approval standards by such entities; and (2) minimize the risk presented to the Private Capital Reserves. SEC. 0. CAPITAL REQUIREMENTS. (a) IN GENERAL. The Director shall establish standards under this section regarding solvency and the VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

15 1 adequacy of the amount and structure of the capital of 2 an approved private credit enhancer, which shall include 3 such risk-based capital requirements and leverage restric- 4 tions as the Director considers necessary to meet the re- 5 quirements under subsection (b). 6 (b) CONSIDERATIONS. The standards established under this section shall (1) be designed to ensure the financial safety and soundness of an approved private credit enhancer; and (2) shall be comparable to capital requirements applicable to banking, depository, and other financial institutions. (c) MINIMUM REQUIREMENTS. In accordance with regulations prescribed by the Director, an approved pri- vate credit enhancer shall comply with the following re- quirements: (1) CREDIT RISK TRANSFER MECHANISMS. (A) IN GENERAL. Subject to subparagraph (C), an approved private credit enhancer shall maintain eligible credit risk transfer mechanisms that together cause credit risk transfer counterparties to bear a portion of credit risk, as a percentage of the unpaid principal balance of mortgage loans guaranteed by the private VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

16 1 credit enhancer, as determined by the Director, 2 to ensure 3 (i) the financial safety and soundness 4 of the private credit enhancer; 5 (ii) the amount of risk transferred to 6 credit risk transfer counterparties; (iii) the amount of capital relief as de- termined under the standards established under subsection (a), established with com- parability to the capital relief in place for credit risk transfer mechanisms allowable for a comparable framework for the bank- ing system; and (iv) the economics of such trans- actions and their impact on the financial viability of the private credit enhancer. (B) ELIGIBLE INSTRUMENTS. In devel- oping the approval process for credit risk transfer mechanisms, the Director shall (i) consider mechanisms that include credit-linked structures or other instruments that are designed to absorb credit losses on single-family covered securities; VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

17 1 (ii) consider any credit risk transfer 2 mechanisms undertaken by private credit 3 enhancers; and 4 (iii) ensure that the mechanisms will 5 accommodate the availability of mortgage 6 credit on equal and transparent terms in the secondary mortgage market for small mortgage lenders and lenders from all geo- graphic locations, including rural locations. (C) EXCEPTION. The Director may waive or lower the requirement under subparagraph (A), but only if (i) the Director considers such waiver or lowering necessary due to adverse mar- ket conditions for approved private credit enhancers; and (ii) the Director makes the determina- tion that the approved private credit enhancer has a sufficient amount of equity capital exceeding the minimum amount re- quired for approved private credit enhancers. (2) CAPITAL. An approved private credit enhancer shall maintain an amount of capital, after taking into account any capital relief afforded by the VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

18 1 eligible credit risk-sharing arrangements of the pri- 2 vate credit enhancer, sufficient to satisfy 3 (A) a leverage restriction requiring equity 4 capital, as a percentage of the aggregate unpaid 5 principal amount of the collateral guaranteed by 6 the private credit enhancer that secures guaran- teed mortgage-backed securities, equal to a minimum ratio as determined by the Director and comparable to the capital requirements ap- plicable to banking, depository, and other finan- cial institutions; (B) a risk-based capital requirement re- quiring equity capital, as a percent of the ag- gregate amount of risk-weighted assets (as de- termined by the Director) guaranteed by the private credit enhancer that secures guaranteed mortgage backed securities, equal to a min- imum ratio as determined by the Director and comparable to the capital requirements applica- ble to banking, depository, and other financial institutions; and (C) a countercyclical capital buffer require- ment. (d) UNDERCAPITALIZATION. The standards estab- lished under this section shall provide sanctions for failure VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

19 1 to comply with such standards and shall authorize the Di- 2 rector to take the same actions with respect to a private 3 credit enhancer that is undercapitalized, based on the 4 same degree of undercapitalization, that are authorized to 5 be taken under sections 65, 66, 6, and 6 of 6 the Federal Housing Enterprises Financial Safety and Soundness Act of 2 ( U.S.C. 46, 46, 46, and 46) with respect to an enterprise that is undercapital- ized or significantly undercapitalized. SEC. 1. PRIVATE CAPITAL RESERVES. (a) ESTABLISHMENT. There is established the Private Capital Reserves, which shall be a fund that the Director shall (1) maintain and administer; and (2) use, without further appropriation, only to cover losses on eligible conventional mortgages for which private credit enhancement was provided by a private credit enhancer that is insolvent. (b) DEPOSITS. The Private Capital Reserves shall be credited with any (1) insurance fee amounts required to be deposited in the Reserves under this section; (2) any amounts as are or may be appropriated, transferred, or credited to the Reserves under any other provisions of law; and VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

20 1 (3) amounts earned on investments pursuant to 2 subsection (f) (c) MINIMUM BALANCE. (1) IN GENERAL. Subject to paragraph (2), the Director shall ensure that the Private Capital Reserves attains and thereafter maintains a balance equal to or exceeding the amount that is equal to 2 percent of the aggregate unpaid principal balance of eligible conventional mortgages for which private credit enhancement is provided by approved private credit enhancers. (2) SUSPENSION. The Director may temporarily suspend the requirement under paragraph (1) if the Director determines that market conditions so require. A suspension pursuant to this paragraph shall not affect the requirement under subsection (d) relating to payment of fees for insurance provided by the Private Capital Reserves. (d) FEES. (1) ESTABLISHMENT. (A) REQUIREMENT. Subject to subparagraph (B), for each eligible conventional mortgage for which approved private credit enhancement is provided by an approved private credit enhancer, the Director shall require the ap- VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

21 1 proved private credit enhancer to pay a fee 2 under this subsection for the insurance provided 3 under subsection (a) by the Private Capital Re- 4 serves. 5 (B) EXCEPTION. At any time that the 6 balance of the Private Capital Reserves com- plies with the minimum balance requirement under subsection (c), the Director may waive the payment of fees under this subsection in connection with the provision of private credit enhancement, but only if such waiver does not result in such balance failing to comply with such minimum balance requirement. (2) AMOUNT. The fee required under para- graph (1) shall be established as a percentage of the original principal obligation of the mortgage, as the Director shall determine, as is necessary to (A) achieve and maintain a Private Capital Reserves balance sufficient to ensure that the Director can provide the insurance required by this section and to comply with subsections (a) and (c); and (B) cover the costs of insurance for the Private Capital Reserves obtained in accordance with subsection (g). VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

22 1 (3) UNIFORMITY. The fee required under 2 paragraph (1) 3 (A) shall be set at a uniform amount appli- 4 cable to all approved private credit enhancers 5 purchasing insurance under this section; 6 (B) may not vary (i) by geographic location; or (ii) by the size of the institution to which the fee is charged; and (C) may not be based on the volume of the guarantee business undertaken by an individual approved private credit enhancer. (4) ADJUSTMENT. (A) AUTHORITY. The Director may adjust the amount of the fee under this subsection (i) annually based on the considerations under paragraph (2); (ii) based on whether the Private Capital Reserves has attained the balance required under subsection (c) or not; and (iii) at any time before the Private Capital Reserves has attained the balance required under subsection (c), based on market conditions. VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

23 1 (B) REPORTS. Before any adjustment 2 pursuant to this paragraph takes effect, the Di- 3 rector shall submit to the Congress a report de- 4 scribing the justifications for the adjustment. 5 6 (5) DEPOSIT INTO PRIVATE CAPITAL RE- SERVES. Any fee amounts collected under this subsection shall be deposited in the Private Capital Reserves. (e) EXEMPTION FROM APPORTIONMENT. Notwith- standing any other provision of law, amounts received by the Private Capital Reserves pursuant to any fees collected under this section shall not be subject to apportionment for the purposes of chapter of title 31, United States Code, or under any other authority. (f) INVESTMENTS. Amounts in the Private Capital Reserves that are not otherwise employed shall be invested in obligations of the United States. (g) INSURANCE OF PRIVATE CAPITAL RESERVES. (1) IN GENERAL. The Director shall carry out a risk-sharing program for Private Capital Reserves, as provided in this subsection, to reinsure potential catastrophic losses covered by the Reserves. (2) REINSURANCE BIDS. In providing such insurance, the Director shall carry out a reinsurance bid program under which, before each fiscal year (or VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

24 1 such other time period determined by the Director), 2 the Director shall enter into 3 (A) contracts with market participants to 4 reinsure potential catastrophic losses during 5 such fiscal year (or other time period) that are 6 covered by the Private Capital Reserves; and (B) agreements as necessary to meet the requirements of paragraph (3). (3) AMOUNT OF LOSS TRANSFERRED. (A) IN GENERAL. Except as provided under subparagraph (B), the program under this subsection shall transfer to the private sector not less than percent of the risk of all catastrophic credit loss assumed by the Private Capital Reserves in the event of a default or insolvency of an approved private credit enhancer. (B) EXCEPTION. The Director may provide for the Private Capital Reserves to transfer an amount of catastrophic credit loss risk that is less than an amount required under subparagraph (A) during (i) a transition period beginning upon the establishment of the Reserves and having such duration as the Director shall provide; and VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

25 1 (ii) any period for which the Director 2 determines that such action is necessary 3 based on market conditions. 4 (4) TRANSFER OF LOSS. Risk of catastrophic 5 credit loss assumed by the Reserves and transferred 6 under the program under this section shall be trans- ferred on a pari passu basis. (5) COMPETITIVE BIDDING PROCESS. The Agency shall use a competitive bidding process to determine which market participants shall be granted contracts under the program under this subsection. SEC. 1. PORTFOLIOS. (a) PROHIBITION ON HOLDING MORTGAGES. Ex- cept as provided under this section and the regulations implementing this section, an approved private credit enhancer shall not directly or indirectly purchase, invest in, or otherwise hold any mortgage loans, mortgagebacked securities, or other mortgage assets. (b) WAREHOUSING; POOLING. Subject to the limitations established pursuant to subsection (d), the Director shall provide that an approved private credit enhancer (including any approved credit enhancer that is established as a successor to an enterprise pursuant to section 4(a)(3)(A) of this Act) that is carrying out a mortgage VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 000 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

26 26 1 purchase program under section 1, may hold eligible 2 conventional mortgages purchased under such program for 3 purposes of warehousing such mortgages to provide for 4 pooling and issuance of securities based on or backed by 5 such mortgages under such program. 6 (c) REPURCHASE OF DEFAULTED AND TROUBLED MORTGAGES. Subject to the limitations established pursuant to subsection (d), the Director shall provide that an approved private credit enhancer may re-acquire eligible conventional mortgages that are in default or are subject to such loan modifications as allowed under the provision of approved private credit enhancement and hold such mortgages until the entity is able to dispose of the mortgages. (d) LIMITATIONS. The Director shall establish limitations, based on systemic risk, on the extent of eligible conventional mortgages that may be held pursuant to this section by an approved private credit enhancer at any one time. SEC. 1. CONFLICTS OF INTEREST. The Director shall establish standards, by regulation or guideline, for approved private credit enhancers as the Director considers appropriate to avoid any conflicts of interest. VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

27 SEC. 1. FHFA COORDINATION WITH GNMA. The Director may provide such advice and assistance as the Director considers appropriate to the Association in establishing standards for approval, and approving, issuers of securities based on or backed by eligible conventional mortgages that are guaranteed by the Association pursuant to section 306(g) of the National Housing Act ( U.S.C. (g)). SEC. 1. RESOLUTION. (a) IN GENERAL. Subject only to subsection (b), section 6 of the Federal Housing Enterprises Financial Safety and Soundness Act of 2 ( U.S.C. 46) but not including subsections (k) and (l) of such section (as amended or added, respectively, by title IV of the Bipartisan Housing Finance Reform Act of ) shall apply with respect to an approved private credit enhancer in the same manner and to the same extent that such section applies to a regulated entity or to an enterprise. (b) FHFA AUTHORITY. The Director may, by regulation, provide for such exceptions and modifications in the application of such section 6 to approved private credit enhancers as the Director considers necessary to account for differences between private credit enhancers and the regulated entities and enterprises. VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 0002 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

28 SEC. 1. SMALL LENDER ACCESS PROGRAM. (a) AUTHORITY. An approved private credit enhancer may (1) carry out a mortgage purchase program that allows small lenders to sell for cash eligible conventional mortgages; (2) issue securities based on or backed by such mortgages purchased; and (3) to the extent such entity is approved by the Government National Mortgage Association as an issuer of eligible conventional mortgage securities (as such term is defined in section 306(g)(4) of the National Housing Act ( U.S.C. (g)(4))), obtain guarantees of securities from such Association. (b) OVERSIGHT. Any mortgage purchase program established pursuant to subsection (a) shall be subject to the oversight and regulation of the Government National Mortgage Association and the Director, who may adopt such supplemental standards as necessary to ensure that each approved private credit enhancer operates in a safe and sound manner and to minimize any risk presented to the Private Capital Reserves under section 1 that may arise from the operation of the mortgage purchase program. (c) PROHIBITION ON PRICE DISCRIMINATION. Any supplemental standards adopted pursuant to subsection VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 0002 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

29 2 1 (b) shall ensure that approved private credit enhancers do 2 not discriminate on the price paid for an eligible 3 converntial mortgage based on the size or loan production 4 volume of the small lender selling the loan through the 5 mortgage purchase program. 6 (d) LIMITATION. An approved private credit enhancer may not purchase eligible conventional mort- gages under the mortgage purchase program under this section in any year from any single lender having an ag- gregate original principal obligation in excess of 5 percent of the aggregate original principal obligation of all eligible conventional mortgages purchased by the private credit enhancer in such year under such program. SEC. 1. LENDER ACCESS TO CASH WINDOW THROUGH FEDERAL HOME LOAN BANKS. The Federal Home Loan Bank Act ( U.S.C. et seq.) is amended by inserting after section 3 the following: SEC. 2A. MORTGAGE SECURITIZATION. (a) IN GENERAL. A Federal Home Loan Bank may seek approval from the Government National Mortgage Association under section 306(g)(1) of the National Housing Act as an issuer of eligible conventional mortgage securities for purposes of eligibility for guaranty under VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 0002 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

30 30 1 such section 306(g) of the payment of principal of and 2 interest on such securities (b) PURCHASE OF ELIGIBLE CONVENTIONAL MORTGAGES. In issuing securities described under subsection (a), a Bank shall purchase the eligible conventional mortgages backing such securities from Bank members of the Federal Home Loan Bank System, regardless of whether such Bank members are members of the specific Bank issuing the securities. (c) OPERATION OF CASH WINDOW. A Bank may purchase eligible conventional mortgages from lenders through the operation of a cash window for the purchase of individual eligible conventional mortgages. (d) PROHIBITION ON PRICE DISCRIMINATION. A Bank may not discriminate on the price paid for an eligible conventional mortgages based on the size or loan production volume of the Bank member selling the loan. (e) PROHIBITION ON ASSUMING CERTAIN CREDIT RISK. (1) IN GENERAL. The Director shall establish rules to prohibit a Bank from assuming additional credit risk related to an individual eligible conventional mortgage after the Government National Mortgage Association has guaranteed a security backed by such mortgage. VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

31 31 1 (2) EXCEPTION. Paragraph (1) shall not 2 apply to 3 (A) credit risk to the extent necessary to 4 engage in the business of securitizing guaran- 5 teed mortgage-backed securities prior to the im- 6 plementation of the Ginnie Mae Plus program established pursuant to section 1 of the Bi- partisan Housing Finance Reform Act of ; or (B) counterparty risk involved in the sale of eligible conventional mortgages. (f) DEFINITIONS. For purposes of this section (1) the term Director means the Director of the Federal Housing Finance Agency; and (2) the terms eligible conventional mortgage and eligible conventional mortgage security have the meaning given those terms, respectively, under section 306(g)(4) of the National Housing Act. (g) EFFECTIVE DATE. This section shall take ef- fect (1) with respect to the Federal Home Loan Bank of Chicago, on the date that the Director has placed both the Federal National Mortgage Associa- tion and the Federal Home Loan Mortgage Corpora- VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

32 32 1 tion into receivership under section 4 of the Bi- 2 partisan Housing Finance Reform Act of ; and 3 (2) with respect to all other Federal Home 4 Loan Banks, on the date that the Director has com- 5 pleted all reorganizations required under section 6 4(a)(3) of the Bipartisan Housing Finance Re- form Act of.. SEC. 1. REGULATORY IMPLEMENTATION OF CREDIT RISK-SHARING MARKET. (a) APPLICATION OF SECTION 3 OF THE INVEST- MENT COMPANY ACT OF 40. For any approved credit risk transfer mechanism (as defined under section 1), including a transaction in which credit risk is transferred on mortgage loans that do not directly back the securities being issued, the issuer shall be deemed to be a person primarily engaged in the business of purchasing or otherwise acquiring mortgages or other liens on and interests in real estate for purposes of section 3(c)(5) of the Investment Company Act of 40 ( U.S.C. 0a 3(c)(5)). (b) FEDERAL INCOME TAX TREATMENT. (1) REAL ESTATE MORTGAGE INVESTMENT CONDUITS. For purposes of sections 60A through 60G of the Internal Revenue Code of 6 (the Code ) VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

33 33 1 (A) any financial instrument issued by an 2 enterprise (or a legal entity sponsored by an en- 3 terprise to implement a credit risk transfer 4 transaction) as part of a credit risk transfer 5 transaction shall be treated as a qualified 6 mortgage ; and (B) any amount includible in gross income with respect to such a financial instrument shall be treated as interest on a qualified mortgage. (2) REAL ESTATE INVESTMENT TRUSTS. For purposes of Code sections 56 through 60 (A) any financial instrument issued by an enterprise (or a legal entity sponsored by an enterprise to implement a credit risk transfer transaction) as part of a credit risk transfer transaction shall be treated as a real estate asset ; and (B) any amount includible in gross income with respect to such a financial instrument shall be treated as interest on an obligation secured by a mortgage on real property. (3) TAXABLE MORTGAGE POOLS. A credit risk transfer transaction entered into by an enterprise (or a legal entity sponsored by an enterprise) shall VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

34 34 1 not be treated as a taxable mortgage pool for pur- 2 poses of section 01(i) of the Code. 3 (4) REGULATIONS. The Secretary of the 4 Treasury shall prescribe such regulations or admin- 5 istrative guidance as may be necessary or appro- 6 priate to carry out the purposes of this subsection. (c) RULE OF APPLICATION. Subsections (a) and (b) shall apply in the case of an approved credit risk transfer mechanism that is outstanding on, or is issued after, the date of the enactment of this Act. (d) CONFORMING AMENDMENTS. (1) INVESTMENT COMPANY ACT OF 40. Section 3(c)(5) of the Investment Company Act of 40 ( U.S.C. 0a 3(c)(5)) is amended by adding at the end the following: For any approved credit risk transfer mechanism (as defined under section 1 of the Bipartisan Housing Finance Reform Act of ), including a transaction in which credit risk is transferred on mortgage loans that do not directly back the securities being issued, the issuer shall be deemed to be a person primarily engaged in the business of purchasing or otherwise acquiring mortgages or other liens on and interests in real estate.. (2) RULE OF APPLICATION. The amendments made by paragraph (1) shall apply in the case of an VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

35 35 1 approved credit risk transfer mechanism that is out- 2 standing on, or is issued after, the date of the enact- 3 ment of this Act SEC. 1. DEFINITIONS. For purposes of this title, the following definitions shall apply: (1) AFFILIATE. The term affiliate means, with respect to an entity, any other entity that controls, is controlled by, or under common control with, such entity. (2) AGENCY. The term Agency means the Federal Housing Finance Agency. (3) APPROVED CREDIT RISK TRANSFER MECHA- NISM. The term approved credit risk transfer mechanism means a credit risk transfer mechanism that has been approved by the Director under section 0. (4) APPROVED PRIVATE CREDIT ENHANCE- MENT. The term approved private credit enhancement means private credit enhancement that has been approved by the Director under section 4. (5) APPROVED PRIVATE CREDIT ENHANCER. The term approved private credit enhancer means a private credit enhancer that has been approved by the Director under section 5. VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

36 (6) CONVENTIONAL MORTGAGES; ELIGIBLE CONVENTIONAL MORTGAGES. The terms conven- tional mortgage and eligible conventional mortgage shall have the same meanings given such terms in section 306(g)(4) of the National Housing Act ( U.S.C. (g)(4)). () CREDIT RISK TRANSFER MECHANISM. The term credit risk transfer mechanism means, with respect to a conventional mortgage, any transaction, mechanism, product, structure, contract, or security agreement by which a private market holder other than the private credit enhancer for the mortgage loan credit assumes the first loss position, or any part of such position, associated with the mortgage. () DIRECTOR. The term Director means the Director of the Federal Housing Finance Agency. TITLE II DEVELOPMENT AND DEPLOYMENT OF A MORT- GAGE SECURITY MARKET EX- CHANGE AND DATA REPOSI- TORY SEC. 1. PURPOSES. The purposes of the Mortgage Security Market Exchange created by this title are VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

37 3 1 (1) transferring the Common Securitization 2 Platform as property of the enterprises to an inde- 3 pendent Mortgage Security Market Exchange avail- 4 able to all issuers of residential mortgage-backed se- 5 curities as a meaningful secondary mortgage market 6 alternative to the enterprises and the Government National Mortgage Association that facilitates the transition to a post-conservatorship secondary mort- gage market. (2) developing interoperable technology and standards to be used by the Common Securitization Platform to accommodate all platform users; (3) developing a uniform contractual and disclo- sure framework to standardize data and reporting for qualified securities issued through the platform; (4) ensuring fair and non-discriminatory access to the Common Securitization Platform for any qualified issuer, servicer, agency, or other counterparty; (5) ensuring the Common Securitization Plat- form has the flexibility to adapt to the evolving standards and requirements of the secondary mort- gage market; and (6) improving the uniformity, quality, and ac- cessibility of information related to the creation, au- VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 0003 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

38 3 1 thentication, transmission, storage, and performance 2 of residential mortgage loans SEC. 2. DEFINITIONS. For purposes of this title, the following definitions shall apply: (1) AFFILIATE. With respect to the Exchange, the term affiliate means any entity that controls, is controlled by, or is under common control with, the Exchange. (2) AGENCY. The term Agency means the Federal Housing Finance Agency. (3) COMMON SECURITIZATION PLATFORM; PLATFORM. The terms Common Securitization Platform and Platform mean the securitization platform first described by the paper issued by the Agency on October 4,, entitled Building a New Infrastructure for the Secondary Mortgage Market, and updated in subsequent documents released by the Agency, including annual strategic plans for the conservatorship of the enterprises and annual conservatorship scorecards. (4) COMMON SECURITIZATION SOLUTIONS. The term Common Securitization Solutions means Common Securitization Solutions, LLC, the joint venture formed by the enterprises in October, VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 0003 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

39 3 1 or any successor to Common Securitization Solu- 2 tions, LLC, that is a joint venture of the enterprises. 3 (5) DEPOSITOR. The term depositor 4 means 5 (A) any person authorized to submit docu- 6 ments or data for registration with the Reposi- tory; and (B) any person qualified pursuant to sec- tion 1 (relating to organization and operation of the Repository) to inform the Repository of (i) newly-identified interest holders, whether through creation, assignment, or transfer; or (ii) changes to interests of existing holders, including through modification, amendment, or restatement of, or dis- charge related to, any registered mortgage- related document. (6) DIRECTOR. The term Director means the Director of the Federal Housing Finance Agen- cy. () ENTERPRISE. The term enterprise means VerDate Nov 0 0:36 Sep 06, Jkt PO Frm 0003 Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

40 40 1 (A) the Federal National Mortgage Asso- 2 ciation and any affiliate thereof, and 3 (B) the Federal Home Loan Mortgage 4 Corporation and any affiliate thereof. 5 () EXCHANGE. The term Exchange means 6 the mortgage security market exchange established under section 1. () EXCHANGE-AFFILIATED PARTY. The term exchange-affiliated party means (A) any director, officer, employee or con- trolling shareholder of, or agent for, the Ex- change; (B) any shareholder, affiliate, consultant, or joint venture partner of the Exchange, and any other person, as determined by the Director (by regulation or on a case-by-case basis) that participates in the conduct of the affairs of the Exchange; and (C) any independent contractor of the Ex- change (including any attorney, appraiser or ac- countant) if (i) the independent contractor know- ingly or recklessly participates in any viola- tion of law or regulation, any breach of fi- VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

41 41 1 duciary duty, or any unsafe or unsound 2 practice; and 3 (ii) such violation, breach or practice 4 caused, or is likely to cause, more than a 5 minimal financial loss to, or a significant 6 adverse effect on, the Exchange. () MORTGAGE-RELATED DOCUMENT. The term mortgage-related document means any document or other information or data related to the use of residential real estate as security for a loan, including documents establishing an obligation to repay a loan secured by residential real estate, establishing a security interest in real estate (so long as such security interest has first been recorded or registered under State law to establish the priority of such interest), establishing the value of the real estate at the time the security interest is created, and insuring clear title to residential real estate pledged as security, or as the Director by regulation may define. Such documents may include electronic documents. () ORGANIZER. The term organizer means the person or entity that establishes the Exchange. VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X

42 42 1 () PARTICIPANT. The term participant 2 means any person authorized to use data maintained 3 or created by the Repository that is not otherwise 4 available to the public. 5 () REPOSITORY. The term Repository 6 means the national mortgage data repository orga- nized under section 1. () TRANSFER DATE. The term Transfer Date means the date established under section 5(b). () TRANSITION PERIOD. The term Transi- tion Period means the period beginning on the date of the enactment of this Act and ending on the Transfer Date. Subtitle A Establishment and Authority of the Exchange SEC. 1. ESTABLISHMENT. (a) AUTHORITY OF DIRECTOR. Under such regulations as the Director may prescribe, the Director shall provide for the organization, incorporation, examination, operation, and regulation of a Mortgage Security Market Exchange ( Exchange ). The Exchange shall be organized, operated, and managed as a not-for-profit entity. (b) FORMATION OF EXCHANGE; APPLICATION. VerDate Nov 0 0:36 Sep 06, Jkt PO Frm Fmt 6652 Sfmt 61 C:\USERS\PCCALLEN\APPDATA\ROAMING\SOFTQUAD\XMETAL\.0\GEN\C\INTRO_~1.X